David Lassman / The Post-StandardMotorists and a bicyclist pass the Hotel Syracuse complex Friday. An Israeli lender has started a foreclosure proceeding on the former hotel's newer section, the tower at right. A project to convert the tower into apartments came to a halt in September. The hotel's historic section, at left, is not part of the foreclosure.

An Israeli mortgage lender has started foreclosure proceedings against Symphony Place -- the modern section of the former Hotel Syracuse -- where construction work has stalled just short of completing its renovation into upscale apartments.

Apartment construction was 80 percent complete when work stopped in September, and the project owners were trying to raise more money to finish the job when the foreclosure was filed, said project manager Mark Belanger, the local representative for the Israeli owner of the property.

Perfect Provident Fund Ltd., which holds a $10 million mortgage on the 15-story property, said in foreclosure papers that building owner GML Tower LLC defaulted on the mortgage by racking up more than $3.7 million in mechanic's liens that have been filed by contractors seeking to get paid.

The building owner also defaulted by failing to stay current on property taxes, according to the foreclosure papers, which were filed last week in state Supreme Court in Syracuse.

GML Tower is principally owned by Ameris Holdings Ltd., of Israel. Levy Kushnir, of Tel Aviv, is chairman, and his son, Elad, is chief executive officer.

In addition to the tower building at 111 E. Onondaga St, at South Warren Street, the foreclosure proceeding includes the Addis building, at 449 S. Salina St. That's a vacant, five-story structure formerly owned by the Addis Co.

The foreclosure does not include the historic section of the Hotel Syracuse, at 500 S. Warren St., which was not included as collateral on the mortgage. The old hotel is owned by another company affiliated with Ameris Holdings, GML Syracuse LLC.

Despite the foreclosure filing, GML Tower is discussing a financial settlement that would avoid a foreclosure auction and allow the project to go forward, said Belanger, president of New Paradigm Realty, who serves as project manager and the owner's local representative.

Belanger said a buyer might step in to acquire the property and take over the project.

"What's happening now is ongoing discussions between the owner and the lender and a third party who is potentially interested, which involve a settlement to avoid proceeding with the foreclosure action," Belanger said. "Those discussions are happening right now in parallel with the litigation."

Belanger declined to identify the potential buyer. Lawyers for Perfect Provident, the lender, could not be reached Friday.

A plan to renovate the modern, tower section of the Hotel Syracuse into upscale residential units was announced in late 2005. Construction on the $10 million project began in September 2007.

Seventy-five apartments, with rents ranging from $1,200 to $3,000 per month, are being created on the building's top 13 floors, Belanger said. The bottom two floors will be commercial space.

Work ground to a halt in September.

GML Tower had been trying to raise money to complete the renovation when the foreclosure proceeding was filed, Belanger said.

"The owner was not in a position to restart the construction until it completed the balance of its financing for the tower," Belanger said. "That's what we're working toward. We hope the settlement discussions will provide a path toward that end."

In the meantime, contractors on the project have rushed to the Onondaga County Courthouse in recent weeks to file mechanic's liens against the property, alleging that they have not been paid.

The largest of those liens, for more than $3.2 million, was filed by construction company Hayner Hoyt Corp., of Syracuse, according to the foreclosure papers.

At least five other companies -- roofers, painters, electricians and others -- have filed liens, the lawsuit said. The liens total more than $3.7 million, according to the lawsuit filed by Perfect Provident.

As of mid-November, GML Tower owed more than $100,000 in overdue property taxes, according to Perfect Provident. GML Addis owed more than $15,000 on the Addis building, according to the litigation.

In its foreclosure filing, Perfect Provident asked Supreme Court Justice Deborah Karalunas to appoint Louis Fournier, president of The Sutton Cos., to act as court-appointed receiver to take over operation of the hotel tower and of the Addis building on behalf of the lender. Karalunas scheduled a hearing Wednesday to consider that request.

Perfect Provident, which Belanger described as a pension fund manager, acquired the mortgage on the properties in 2007, according to court papers. Earlier this year, Perfect Provident increased the principal amount from $5.5 million to $10 million.

The historic portion of the Hotel Syracuse is in line for up to $6.75 million in state grants if the owners follow through with plans to renovate it as a hotel and condominium complex. But the tower building, Symphony Place, has been renovated into apartments entirely with private money, Belanger said.

Belanger said bringing the entire Hotel Syracuse complex back to life is ambitious -- and difficult.

"It's not an easy thing," he said. "The renovation of the Hotel Syracuse complex is a difficult and challenging undertaking that requires not only substantial private funds, but participation by the public sector, as well."

The owners are eager to get the project back on track, he said.

"The owners have been very grateful for the support of the city, the county and the state in helping to move that overall project forward," he said. "It is the owners' desire to bring the project back on track so that it can be completed over the course of 2009 and 2010."

The original Hotel Syracuse was built in 1924. The tower was added in 1983. The complex began a long, downward spiral in the late 1980s, as its debts mounted.

Beginning in 1990, the hotel went through a series of owners and two bankruptcies, filed in 1990 and 2001. It closed in May 2004.